TABLE I.-Summary of loan authorizations to companies in the iron and steel industry through June 9, 19501 1 For the purposes of this tabulation, it has been assumed that the "Iron and Steel Industry” consists of those concerns listed in one or more editions of the "Directory of Iron and Steel Works of the United States and Canada," published by The American Iron and Steel Institute. 2 In August 1945 the eight loans to the Kaiser Co., Inc. (now Kaiser Steel Corp.), were refunded in two new loans. At that time, the unrepaid balance on the eight loans was $102,828,380. Included in the two refunding loans was $11,500,000 of new money, bringing the total authorized to $114,328,380. Source: Industrial Analysis Branch, Budget and Reports Division, Office of the Controller. TABLE II.-Detail of authorizations to companies in the iron and steel industry, Jan. 1, 1945, to June 9, 1950 Jessop Steel Co., Washington, Pa.. Electric furnace ingots, plates, McLouth Steel Corp., Detroit, Hot and cold rolled strip. See NOTES A to E on pp. 708-709. Deferred participation loan; bank's Direct loan; company did not request Direct loan; no disbursements made Direct loans, fully disbursed; new TABLE II.-Detail of authorizations to companies in the iron and steel industry, Jan. 1, 1945, to June 9, 1950-Continued NOTE A.-Central Iron and Steel Co.: The loan of $4,700,000 authorized to this company in June 1949, was intended to assist in the financing of the following facilities at thei With the purchase of the Phoenix plant, the installation of the new steel-making facilities contemplated at the time of making the first loan were no longer considered necessary. NOTE B.--Jessop Steel Co.: As part of a reorganization plan designed to place the company in an improved financial and competitive position, this company proposed to purchase The proceeds of the loan are intended to be used as follows: For purchase of facilities. For payment of wage claims. To refund bonded indebtedness. For operating expenses. $50,000 60,000 NOTE C.-Lone Star Steel Co.: The Lone Star Steel Co. was formed during the war to operate certain facilities installed by the Government under DPC Plancors 763 and 1507. The proceeds of the $34,000,000 loan authorized to this company are intended to be used in financing certain steel-making facilities which will enable the company to use the pig iron it now produces. The principal facilities to be added include: 4 open-hearth furnaces, 1-44" x 110" slabbing mill, 1-27" x 19" x 72" Steckel finishing mill, electric weld pipe mills, buildings, and auxiliary facilities. NOTE D.--McLouth Steel Corp.: At the time the company applied for the $10,500,000 loan, it was operating as a conversion mill. Suppliers of semifinished steel claimed that sales of such materials were made at a loss and notified McLouth of their intention to discontinue supplying semifinished steel one year after date of notice. In order to be assured of a supply of steel, the company decided to install its own facilities. The facilities to be added included: 4 60-ton electric furnaces, soaking pits, 1-10" blooming mill, 1-42" hot mill, buildings, and auxiliary facilities. Originally, it was estimated that these additions would cost approximately $18.5 million; of this, $10.5 million was to be supplied by the RFC loan. Later, it was found that the NOTE E.-Pacific States Steel Corp.: To augment its existing facilities, this company applied for a loan to assist in financing the acquisition of 4 60-ton open hearth furnaces from The company later revised its plans and, instead of the facilities originally contemplated, proceeded with the erection of a 26" rolling mill and 2 130-ton open hearth furnaces. Source: Industrial Analysis Branch, Budget and Reports Division, Office of the Controller. RECONSTRUCTION FINANCE CORPORATION, Hon. EMANUEL CELLER, Chairman, Committee on the Judiciary, Subcommittee on Study of Monopoly Power, House of Representatives, Washington, D. C. DEAR MR. CELLER: The material accompanying this letter is in further response to your request of May 24, 1950, regarding the steel firms and facilities financed by the Reconstruction Finance Corporation. Supplementing the tables sent to you with my letter of June 20, 1950, you will find attached tables III, IV, and V, consisting respectively of the detail on loans authorized to members of the iron and steel industry during the defense and war periods (table III), those authorized prior to July 1, 1940 (table IV), and a summary of the financial data on all loans authorized to members of that industry (table V). Through June 9, 1950, this Corporation authorized 72 loans to 36 iron and steel companies; the total amount of these authorizations was $216,848,983. Of these, 15 authorizations for $8,347,000 were canceled before any disbursements were made, and partial cancelations totaling $1,667,267 were made in 9 other authorizations, leaving a total of 57 authorizations for $206,834,716 on which funds were disbursed, or which may be disbursed at some future date. In the period from the inception of the Reconstruction Finance Corporation on February 2, 1932, to July 1, 1940, there were authorized to members of the iron and steel industry 35 loans for $10,993,983. Many of these were made to firms which were in troubled financial circumstances by reason of the general business recession of the early thirties. Several of them were to concerns which Lad closed their plants or were conducting limited operations under receivership pending reorganization. The loans authorized in the prewar period were mainly for the purpose of resuming production in the closed plants and to assist all of the borrowers to regain profitable operations; less than 20 percent of the loan proceeds were earmarked for additional facilities or improvements to existing plants. Following the gradual recovery from the depression, and about at the time of the inception of the defense program, the steel industry in general was oper ating on a profitable basis. However, in financing some of the defense and wartime expansion projects, a few companies turned to this Corporation for loan funds. From July 1, 1940, through December 31, 1944, there were 20 loan authorizations totaling $130.815,000 made to steel concerns; among these were the eight Kaiser Co. loans amounting to $111,805,000. As the defense program progressed, the need for more and more steel-making facilities became apparent and it was found that the projects contemplated by the agencies preceding the War Production Board were either beyond the ability of the industry to finance from private sources, or the industry was reluctant to proceed with them because of doubts about their economic operation during peacetime. In consequence, it became apparent that to have the needed facilities they must either be constructed by the Government or some limitation placed on the risk undertaken by companies erecting facilities with their own funds. The latter was accomplished through the certificates of necessity provided by section 124 of the Internal Revenue Code. This section provided accelerated amortization, for income tax purposes, for those privately financed facilities covered by the certificates. About half of all funds expended for steel facilities during the defense and war periods represented the cost of Government-owned facilities; the balance was expended by the steel industry and was largely covered by certificates of necessity. In connection with the financing of wartime facilities, the contribution made by the Defense Plant Corporation-a former subsidiary of RFC-is well known. Included in the list of DPC facilities were some 230 projects relating to the |